Shopify Q3 revenue up as COVID boosts online sales

Ottawa-based e-commerce company added a record number of merchants looking to strengthen their online platforms

The flood of businesses scrambling to build or enhance their digital efforts during the COVID-19 pandemic nearly doubled Shopify Inc.'s third-quarter revenue compared with a year ago.

The Ottawa-based e-commerce company, which keeps its books in U.S. dollars, said Thursday that its revenue reached US$767.4 million in the quarter, up from US$390.5 million during the same period last year.

Shopify also said it earned US$191.1 million in the quarter, compared with a loss of US$72.8 million in the prior year.

Harley Finkelstein, who was promoted to president at the end of September, said the quarter was boosted by more brands than ever before opening their first e-commerce stores or shifting existing ones from other platforms to Shopify as COVID-19 brought retail foot traffic to a halt.

"We believe these changes in the landscape will endure as consumers' new shopping behaviours stick and become the new normal," he told a conference call with financial analysts.

Those conditions helped Shopify add a record number of merchants for the second quarter in a row and a record number of them became paid subscribers.

Shopify lured many of them in with extended free trials lasting 90 days, up from the 14 days it previously offered, and some made their first sales faster than the platform has ever seen before.

The quarter, Finkelstein said, saw well-known brands such as Dior, Beyond Meat, Clif Bar and Jenny Craig join the platform and the goal is to keep growing.

"We want to capture anyone thinking of starting a business. Whether or not they become the next Gymshark or the next Allbirds remains to be seen, but the idea is that we want to capture anyone who has any ambition to start a business on Shopify," he said.

Finkelstein's remarks came as the company's adjusted earnings hit US$140.8 million, up from last year when it lost US$33.6 million.

Looking ahead, the company was optimistic about the upcoming Black Friday, Cyber Monday and holiday shopping seasons.

A recent survey of merchants Shopify conducted found companies are anticipating more online than in-store purchasing for Black and Cyber Monday, pushing more than half of those in the retail space to make improvements to their online stores ahead of the expected flurry.

Shopify executives said the company is doing its best to increase staff in its fulfilment centres and predict and mitigate supply chain issues ahead of the rush.

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